Sunday, January 14, 2007

Give the word.

Sweet marjoram.

Say the right words and the lunatic will let you through. Is it too heavy-handed to apply this to Wall Street? The housing market, with a $20 trillion exposure, is falling. Worse, while the fall began end of summer 2005, it is still small. To be sure, it's growing in size and speed, but Wall Street is desperate to continue the farce.

National Association of Realtors is gleeful: Pending Home Sales Show Steady Trend. Except, right off the bat, we read: "The Pending Home Sales Index, based on contracts signed in November, eased by 0.5 percent to 107.0 from an upwardly revised reading of 107.5 in October, and is 11.4 percent lower than November 2005." But don't panic, dear mortgage holder - the narrowing of the index points to stabilization and that means stable home sales in the future. What the-! By the way, this press release fails to mention the cancellation rate on pending contracts. I'm guessing it's a significant number. People who sign a contract on a new home but can't sell their old home are probably canceling the contract and walking away from their earnest money.

Something else they fail to mention: the Census Bureau computes home sales based on a sampling of contracts signed. If a contract is cancelled the Census Bureau does not subtract the home sale nor add the house back to inventory.

Kate Incontrera, aka The Fuse, does a terrific job explaining the ham-handed con job the Street is still trying to pull on the public.

Sadly for the Street, the disconnect between the junk they're peddling and what people are EXPERIENCING is too great a disconnect. Once the public figures out that the Street does this with every set of numbers then the real show begins.

Well, that's fennel for you.

*From King Lear, Act III, Scene VI (Fields Near Dover). In Shakespeare's time sweet marjoram was used to treat insanity. Of course, what they considered insanity is a whole different issue.

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